There are thousands upon thousands of market indexes in financial markets used by market participants to gauge supply, demand and performance of a specific sub-set of constituents. Indices are seen as performance benchmarks and they underlie a vast range of investment styles and strategies. Index investing is seen as a diversified way of playing a given market. Indices cover equities, fixed-income, commodities, currencies and the full range of financial instruments. The movements of any market sub-set that has tradable prices can be captured in an index. In essence, an index is a synthetic representation of the value of its underlying constituents. Index values are derived from a series of different calculation methodologies. Some equity indices are valued according to the market capitalisation of its constituents; others by market prices; others still are price-weighted.


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